Online office outlook cloudy

Microsoft says its head is firmly in the clouds after cutting the price of some communications and collaboration software that businesses can access over the internet by more than one-third.

But one Wellington expert is unconvinced. Simon Stokes, chief operating officer of digital media company Modica Group, and a former internet product development manager at TelstraClear, believes Microsoft may only be hitching a ride on the cloud computing bandwagon and says its offering leaves him unmoved.

Microsoft business group leader Anne Taylor says more than 200 businesses have bought or started to trial its Business Productivity Online Suite (Bpos) since the company launched the service in New Zealand and other countries in April.

The suite comprises a version of Microsoft's popular email product Exchange Online, as well as web-based versions of collaboration suite SharePoint, Office Communications and Microsoft Office Live Meeting.

The price cut brings the cost down to $17.24 per user per month.

Auckland manufacturer Sistema Plastics is a big user of the service, using it to communicate with staff in Britain.

"As a New Zealand small business taking on the world, we need reliable, flexible information-technology systems that are easily managed with minimal overhead," financial controller Geri Toa says.

Mr Stokes says 200 customers is not a big number.

"If that is all they managed to dredge up since April, given there are tens of thousands of small and medium-sized businesses and they are the largest software company in the world, it is not a figure I would be shouting about.

"Hosted Exchange has been around for years and it has never yet taken off. You have to ask the question, `How different is the announcement to the nudges they have given it over the years?'

"It is a significant price drop, but is it enough to engender interest?"

Mr Stokes says inertia may be preventing small businesses from renting business software online, given that companies usually already have Microsoft software installed, but the suite also needs to be more compelling.

"Exchange Online is attractive. To be honest, I couldn't name a single small business I know that uses SharePoint. Office Live Meeting? Yes, but then you have free alternatives such as [Google's] Gtalk , and Office Communications Online – I have to say I am not even entirely sure what that is."

Ms Toa says Office Live Meeting has helped her tutor new staff in Britain on how Sistema's accounting systems works.

"It is all very well to talk to someone over the phone or send them emails, but this system lets you show them what you are doing in the system, plus being able to speak to someone and see them at the same time. You can do that on Skype, but you have the security. In terms of creating that global office feeling, it's particularly helpful."

Sistema still runs Exchange on its own systems to manage email for its more than 100 New Zealand staff, with Exchange Online used only for the staff in Australia and Britain.

Microsoft chief executive Steve Ballmer says corporate spending on information technology will not recover to levels seen in recent years before the global economic slowdown. Spending on information technology, which accounted for about half the capital expenditures in developed countries before the crisis, is unlikely to rebound fully because capital is more scarce these days, he says.

Company purchases of PCs and servers are down about 15 per cent globally. "While we will see growth, we will not see recovery."

- © Fairfax NZ News